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Loan delinquencies fall to record low

Loan delinquency has fallen, according to a new report.

Consumer delinquency rates on auto, home improvement and personal loans all fell in the second quarter of 2014, according to research from the American Bankers Association. Delinquencies in the study were payments late by 30 days or more. The composite ratio of delinquencies in eight types of loans also fell - only 1.57 percent of loans in total were delinquent between April and June. This is a record low for this measure, which the ABA has been keeping track of since the 1970s. 

"When you see delinquencies fall nearly across the board, and are at record low levels, it says consumers have done a really good job bringing their balances down, making sure they can repay their debts and being good stewards of their finances," ABA chief economist James Chessen told The International Business Times.

Job growth has helped bring about this state of affairs, as has rising income levels for those already employed and lower interest rates on loans. All of these factors together mean consumers are more able to repay debts they incur.

Home-related delinquencies, which are property improvement loans, home equity loans and home equity lines of credit, all fell in the second quarter. As home prices rise, the value of many people's homes is more significant, helping to increase their personal wealth and improve their overall financial situation.

Chessen believes the delinquency rates seen in the second quarter will remain where they are, provided job growth continues. Increasing household income is an integral part of seeing loan delinquencies fall, he said, and a continued pattern of more consumers being able to get jobs would help keep delinquency rates near their current lows.